Managing Expectations and Deliverables: A CMO Roundtable

Leading CMOs share their experiences with regard to client expectations and performance indicators as well as strategies for adapting to the changing contract-manufacturing environment. This article is part of the 2010 Outsourcing Resources special issue.

This article is part of PharmTech's supplement "2010 Outsourcing Resources."

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As the pharmaceutical outsourcing industry grows in complexity, sponsor companies are re-evaluting their contract-manufacturing choices and in some cases, asking contract organizations to provide different or additional services. For their part, contract manufacturing organizations (CMOs) are burdened with new requests—and new competition—and working to restrategize and restructure their offerings and performance. To gain perspectives on the metrics currently used to evaluate supplier performance and continuous-improvement methodologies as part of the outsourced relationship between sponsor companies and contract-service providers, Pharmaceutical Technology conducted a roundtable of leading CMOs engaged in this work.

PharmTech» Criteria such as on-time delivery and making product in specification have historically been and continue to be important elements in evaluating supplier performance. What methodologies do you use to evaluate your company's performance in this respect? How have sponsor companies' expectations changed in terms of delivery points and how they measure those criteria?

»Jenkins (Abbott): It is crucial to have a management-reporting process in place that drives a company to forecast, plan, execute and report on a daily, weekly, monthly, quarterly, and annual basis. This process may involve key meetings and reports and address performance indicators that drive the business. Having a set process in place allows for transparency of information and ensures that the operation is focused on the right factors: cost, compliance, customer service, and continuous improvement (what we call the "four Cs").

Several years ago, Abbott set out to become best in class from an operational-excellence standpoint. As part of our certification process, we established a methodology to ensure we could meet customers' demands within a specified window. Class-A performance means being able to achieve delivery success within a designated window of performance at least 95% of the time. As part of our process, if we step outside of this window—regardless of the reason—we perform a root-cause problem-solve (RCPS) analysis with cross-functional subject matter experts (SMEs) within our organization to understand exactly why we missed the delivery. We then implement a sustainable improvement to ensure that the cause of the misstep won't reoccur.

»Dixon (Baxter): Performance-evaluation methods are a crucial element of achieving optimal results in contract manufacturing. A true partnership must serve the needs of both the supplier and the customer, so we make every effort to carefully evaluate and measure performance, striving to meet or exceed our collective goals. This approach begins with an upfront discussion at the kickoff of a project to establish key success factors and the associated metrics to be measured throughout the project, and agreement on how the metrics will be calculated and the frequency at which they will be reviewed.

In Baxter's BioPharma Solutions business, we have designed working environments to ensure comprehensive integration of the staff, processes, and tools as part of our Process 360° customer experience. This environment enables client teams to monitor metrics for each project at each stage. By understanding the robust data and being aware of key process checkpoints, our client teams can take direct action and find improvement opportunities that can influence project outcomes.

We have spent a considerable amount of energy and resources on mapping the customer experience and learning and asking which data points and associated metrics are important to our clients as a project moves from start-up to product release. To support each client's needs, our applications are designed to tailor metrics. We recognize that there are differences in how clients want metrics calculated and how they will use the data. Another component of our customer-experience strategy has been to harmonize the way we calculate and use metrics across our global facilities to ensure a common understanding of the data and how to apply the data. In addition, we use detailed, customized training programs for our project teams to make sure they understand the importance of data integrity, monitoring, tracking, and reporting. By providing clear definitions and technology investment, the client and project team together gain a heightened sense of transparency and control.

Fundamentally, our client expectations for evaluating supplier performance have not changed. A few of the common key performance indicators (KPIs) requested by clients include on-time delivery, saleable yield, exceptions, incident rates, and schedule accuracy. Other metrics such as measures of client satisfaction and mutual financial accountability, are also important to ensure a holistic approach to the partnership.

We have noticed a heightened interest in maintaining control over projects as well as a clearer understanding of potential variables and anticipated challenges. Because many clients use a combination of in-house manufacturing and outsourcing strategies, a major driver for customized metrics has become the comparison of internal manufacturing versus outsourced performance and, ultimately, long-term value. In the upfront evaluation process, clients are interested in understanding our approach to project management, data comparisons, qualification of teams, and metrics tracking as a means of supplier research and assessment. Thanks to our integrated systems, we can share the seamless approach we have to data during every step of the process.

»Kosko (Pfizer): A number of Pfizer CentreSource (PCS) customers use scorecards that are reviewed on a quarterly, semi-annual, or annual basis. Many of these components are based on the Assurance of Supply/Regulatory Compliance, Quality, Service, Cost and Innovation (AQSCI) Pyramid for rating suppliers.

The base of the pyramid and its most important component is assurance of supply and regulatory compliance. This component reflects the minimum requirement for any company that supplies the pharmaceutical industry. While consistently meeting the specifications of a client is a prerequisite, companies can differentiate themselves by the services that they extend to their clients, including:

Product-delivery timing

Customer service

Technical service

Regulatory support

Business development.

Although cost is always a factor, it is typically not the most crucial factor in a supply relationship. A producer's ability to be innovative is always valued by customers, but that ability needs to be closely coordinated due to the potential impact on regulatory filings.

»Alberstetter (Vetter): Vetter manufactures based on customer demand. We measure our deliveries using the KPI Customer Service Level (CSL) with respect to "on-time-in-full." This measurement is performed monthly and shared within the company as well as with the customers. To achieve the preset targets, we make use of SAP (an enterprise-resource planning system) and respective management tools. These tools are part of the Oliver Wight-based operational excellence procedures [Oliver Wright is an international business improvement specialist] that have been in place at Vetter for five years.